KOLKATA | NEW DELHI: The ten-rupee recharge pack is a blockbuster. Rural India can do without biscuits, candy and colas but it needs to feed the smartphone habit to ensure that ‘selfie’ fix.

Phone companies are happy. Those who make the low-ticket items that are impulse buys such as colas, chocolate and confectionery, not so much.

Consumers in rural markets, their buying power stretched after back-toback bad monsoons, clearly prefer mobile recharges to watch videos or take and broadcast selfies, say executives at leading consumer goods manufacturers. Tellingly, the Rs 10 talk-time mobile recharge is the largest-selling pack in the country, a telecom company executive said.

“The ‘selfie culture’ is making consumers spend more on their phones rather than on fast-moving consumer products, which are discretionary,” said Suresh Narayanan, managing director of Nestle India, which makes Maggi noodles and KitKat chocolates among other snacks.The mobile Internet user base in rural India almost doubled in calendar 2015, according to a report by the Internet & Mobile Association of India (IAMAI) and IMRB. In urban India, the user base rose 71%. On the other hand, growth of consumer goods such as colas and confectionery slowed to 5-6%.

“In a lot more homes, the mobile is a necessary expense now. They (consumers) have to take that money from elsewhere. So in some ways, it is impacting consumption of discretionary products. To what extent is tough to say, but we know it is,” biscuit maker Britannia’s Managing

Director Varun Berry said. India’s fast-moving consumer goods (FMCG) industry grew 7-8% in 2015 and could remain subdued at 7-9% in calendar 2016 as well due to lower pricing-led growth and a lack of near-term catalysts with no monsoon quickfix as consumer companies have focussed relatively less on innovation and rural distribution expansion in the past two years, as per a recent report by Nielsen India. A sustainable uptick in consumption growth can only come from improved economic activity, it added.

“Spends on mobile recharges — or low-priced entertainment options — have been replacing impulse buys in rural markets. It’s been directly impacting a category like ours and we’ve been observing this for the past four-five quarters,” said candy and gums maker Perfetti Van Melle’s Managing Director Ramesh Jayaraman.

Perfetti, which sells Alpenliebe and Mentos candies and candy sticks starting at Re 1-10, leads the Rs 8,000-crore-plus non-chocolate confectionery category, and has more than twice the share of ITC and Mondelez.

FAILING TO TEMPT RURAL BUYERS

Coca-Cola and PepsiCo have even pushed down cola prices to as low as Rs 5 per serving to drum up sales but they seemingly can’t tempt enough rural consumers. The April-June quarter saw cola sales in the low single digits and many soft drinks plants are running at half capacity, a top bottler said.

“In rural areas, there was lesser money because of two years of deficit rainfall,” the person said.

“Whatever little money was in their hands, rural consumers preferred to spend on mobile recharge rather than colas. In urban markets, extreme heat prevented consumers from stepping out and impacted our sales. Besides, there are other options like water and functional drinks which did better.”

The IAMAI-IMRB report also said the share of mobile Internet spending out of the average monthly bill increased to 64% in 2015 from 54% in 2014. And in rural India, the majority of users access mobile Internet for entertainment, compared with their urban counterparts, who use it for communication and social networking.

According to Hong Kong-based market tracker Counterpoint Research, almost a third of smartphone sales are in rural India, which is poised to double this year, whereas the total market is estimated to grow by 30%. The imminent launch of 4G services by Reliance Jio Infocomm this year is expected to further drive demand in rural India as network connectivity improves.

“The small recharge, Internet and top-up packs from operators helped end users in rural India to experience the services first and then scale it up once the users are hooked onto those services,” said Counterpoint Research senior telecom analyst Tarun Pathak. “There is a huge pent up demand when it comes to consumption of digital content in rural India.”

The Telecom Regulatory Authority of India (Trai) pulled up Bharti Airtel and Vodafone Idea for warning subscribers of certain plans that their SIM cards would be deactivated if they do not recharge their pre-paid accounts though these subscribers had the minimum required balance.